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Why Zomedica, Naked Brand, Ocugen, and Other Reddit Stocks Crashed Today | The Motley Fool

What happened

After soaring earlier in the year, several stocks that have become favorites among investors on Reddit and other social media sites have pulled back sharply in recent days.

Here’s how some of the most popular of these stocks performed today:

So what

Millions of investors have turned to investment forums such as the WallStreetBets Reddit group in search of ways to make money in the current market environment. After some traders made a fortune by buying shares of GameStop early into its epic Reddit-fueled short squeeze, investors began searching for other volatile stocks to buy. Many of these traders turned to small-cap stocks like Naked Brand, Zomedica, and Ocugen in hopes of mimicking GameStop’s explosive returns.

Image source: Getty Images.

For investors who bought these stocks early in the year, this has been a winning strategy. Ocugen, Zomedica, and Naked Brand are up 587%, 290%, and 207%, respectively, so far in 2021.

However, some investors apparently decided to take their winnings off the table today, and all three stocks are now down sharply from their highs of the year.

Now what

CNBC reported today that many retail investors appear to be shifting out of individual stocks and into exchange-traded funds (ETFs). This dynamic could be partly responsible for the recent downturn in the prices of many previously popular Reddit stocks.

Another reason may be the massive surge in trading in cryptocurrencies such as Ethereum (CRYPTO:ETH) and Dogecoin (CRYPTO:DOGE). Ethereum recently hit new all-time highs above $3,000, and Dogecoin’s price surged 30% today alone. Traders may be leaving the stock market and turning to the crypto arena in hopes of achieving even quicker gains.

Regardless of what they’re buying, one thing is clear: Many investors chose to sell their formerly high-flying Reddit stocks today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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